Swiss analysts dismiss pension funds’ stabilising role

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GERMANY/SWITZERLAND - Swiss financial analysts disagree with their German counterparts about the stabilising role of pension funds in turbulent markets, a survey commissioned by Allianz has found.

A study of banking, insurance and industrial company analysts was conducted by the Centre for European Economic Research (ZEW), on behalf of Allianz Global Investors, which found Swiss analysts are somewhat more sceptical about the role pension fund investments can play in market turbulence, as only 22% agreed with such a statement compared with 49% who did not.

In contrast, 49% of German analysts said they believed pension funds do stabilise markets, against 29% who disagreed, and Allianz concluded the "longer-standing experience" of pension fund behaviour - given the Swiss pensions market is more mature than Germany - means "there is no substantial stabilizing role".

The survey of 230 German analysts and 44 Swiss analysts also revealed 73% of German respondents think companies will continue to fund their pension liabilities over the coming years, even though the tradition had been to run unfunded programmes.

Just 7% of those questioned in Germany believe companies will not continue to fund pension plans, yet findings elsewhere in the survey revealed there are concerns that funding levels will drop as a result of the recent crisis.

At least 71% of German analysts and 66% of Swiss analysts said they fear employers will lower contributions to pension plans, leading Allianz to suggest "if it is more than a temporary trend, the consequences for future pensioners could be severe".

At the same time, however, over half of respondents said they expect employees to cut their contributions, yet a third said they would not as changes to their pensions could affect their retirement security.

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